Governor of the Bank of Israel Amir Yaron held a meeting with Competition Commissioner Michal Cohen, following the Competition Authority’s announcement that it was considering declaring the banks a concentration group.
The Competition Authority’s announcement, released this afternoon, states: "The Authority’s checks indicate apparent limited competition between these banks, whose share in the management of current accounts for retail customers is close to 100%, particularly in taking deposits from customers in the retail sector (households and small and very small businesses). It also emerges that these banks hardly offer any banking services separately from the rest of the "banking basket".
"From the Authority’s findings, as recently presented to the Knesset Finance Committee, it emerges that there are significant gaps between the deposit interest rates offered to households and small and very small businesses, and the rates paid on deposits in the mid-size and large business and private banking sectors.
"The Commissioner is considering declaring the said banks a concentration group and giving them directives on taking deposits."
The main proposed directives are a prohibition on the banks linking deposit taking to other services, such as making it conditional on having a current account at the bank, obliging the banks to take deposits from non-bank payment services companies, which will aggregate deposits from their customers, and obliging the banks to present customers with relevant comparative information.
The Competition Authority says that it has not yet completed its examination and is at the stage of drafting the directives that it is considering, while consulting other regulators concerned, headed by the Bank of Israel.
The Bank of Israel was taken by surprise by the Competition Authority’s announcement. In a statement in response, it said, "At the request of the Competition Authority, a meeting took place this afternoon attended by the governor of the bank and the supervisor of banks at which the Competition Authority raised a number of initial, unformulated thoughts concerning their wish to declare the banks a concentration group. Contrary to what has been reported, the governor and the supervisor have not formulated any stance on the matter."
The Bank of Israel is currently trying to promote competition between the banks over passing on high interest rates to the public holding deposits, and has made clear all along the way that it is avoiding invoking uniform regulatory sanctions. Yaron even sent a strongly worded letter to the prime minister that led to the suspension of legislation on the matter.
Published by Globes, Israel business news - en.globes.co.il - on June 29, 2023.
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